I am a 42-year-old housewife, and earn around Rs. 20,000 a month through tuitions. I want to start investing in mutual funds, and I can invest up to Rs. 10,000 a month. I want to save for my daughter’s wedding, which may be in 15 years.

—Nirmala Jha

First, it is great that you are planning to invest half of your earnings in mutual funds via systematic investment plans (SIPs) for your daughter’s future expenses. If you continue on this course for 15 years, even if you do not increase your monthly investment, you will likely end up with a corpus amount in excess of Rs.50 lakh from an investment of less than Rs.20 lakh (assuming a long term, compounded annual portfolio return of 12%).

Since you are investing for the long term, you can take an aggressive approach and invest 80% of your monthly investment in the stock market in the form of equity funds. The remaining 20% can go to conservative debt funds. When it comes to scheme choices, I would recommend going with a compact 3-scheme portfolio. You can go withRs.4,000 in a diversified fund such as Franklin India Prima Plus, and Rs.4,000 in a large-cap fund such as ICICI Prudential Focused Blue Chip. Remaining can be invested in a short-term debt fund such as UTI Short Term Fund. If you plan to increase your savings, you can a mid-cap fund such as BNP Paribas Midcap.

In an SIP, should I opt for a perpetual or a fixed end date?

—Rahil Khurana

These days many fund houses and service providers are offering the option of doing ‘forever SIPs’’. In a way this is a good option, for it makes the habit of saving and investing a permanent aspect. A corpus gets continuously built for the investor to avail of as and when she needs to withdraw from it. Such an SIP is especially relevant when an investment is a general purpose one without a particular goal associated with it. On the other hand, if you are investing with a particular goal in mind, and with a target corpus to achieve, it would be good to have a fixed number of instalments, if only to keep reminding you of the purpose of the investment and to monitor how your portfolio is doing.

[“Source-Livemint”]